Centre initiates talks with RBI to kick-off bank privatisation process
Published On: Tuesday, September 28, 2021 | By: Team KnowMyStock
The government has initiated consultations with the Reserve Bank of India (RBI) to devise a new security clearance framework for screening potential bidders of public sector banks (PSBs) as it kick-starts the privatisation process, beginning with the strategic divestment of IDBI Bank. As the government is moving ahead with strategic divestment of IDBI Bank and is looking to privatise two PSBs, the Department of Investment and Public Asset Management (DIPAM) is looking to put in place an appropriate framework as the potential buyers will have to meet the RBI’s fit and proper criteria, according to an official.
The process of bank privatisation would be different from the sale of any other public sector undertaking (PSU), and more restrictions and measures will have to be put in place, the official said. As potential buyers of IDBI Bank and two other PSBs will need to meet the RBI’s fit and proper criteria, DIPAM is planning to bring the central bank on board to vet candidates in the first step itself, the official said.
“A mechanism is being considered where the RBI will screen bidders as early as an expression of interest is placed. This would ensure the privatisation process would move ahead only when suitable candidates show interest in acquiring the lender,” the official quoted above said. This is being considered so that the process does not fall through at a later stage if bidders fail to meet the RBI’s criteria, he added.
The government is looking to sell its 45.48 per cent shareholding in IDBI Bank.
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